At this year's two sessions, China's annual meetings for the top legislative body and political advisory body, the Chinese government doubled down on its AI ambitions. "We will promote faster application of new-generation intelligent terminals and AI agents and encourage large-scale commercial application of AI in key sectors and fields, so as to foster new forms and models of AI-native business. We will support the development of open-source AI communities and build a vibrant open-source ecosystem," the government work report says.
Chen Changsheng, a member of the drafting team for the government work report and deputy director of the Research Office of the State Council, provided the official interpretation of this new terminology. "By proposing to create new forms of smart economy for the first time, we aim to seize the opportunities presented by AI development and expand the breadth and depth of AI empowerment across all industries," Chen said. It suggests that China now considers AI not merely as a tool for efficiency but as a foundation for a new economic architecture.
In August 2025, the State Council, China's cabinet, released guidelines on implementing the AI Plus initiative which was proposed in the government work report in March of that year. The guidelines lay out a three-step road: rapid expansion of more intelligent industry by 2027, the smart economy becoming a major growth pillar by 2030, and a full transition toward an intelligent economy and society by 2035. It indicates that China sees AI not as a cyclical boost, but as a structural transformation.
A year after DeepSeek's breakout moment, the rapid proliferation of domestic large language models, together with an open-source approach, has accelerated their diffusion across a wide range of industries. Chinese models now rank among the most downloaded globally, while firms have moved swiftly to advance commercialization, from industrial automation to consumer-facing applications. The focus is no longer solely on closing gaps in model capability, but on integrating these technologies into large-scale deployments in real scenarios.
In this context, the government must strive to establish a robust governance framework. AI also carries a range of economic and societal risks that cannot be overlooked, ranging from data security, privacy risks, cyber-security vulnerabilities, misuse and criminal applications to systemic risks.
For example, the recent surge and restriction of OpenClaw, an open-source autonomous AI agent framework designed to execute multi-step tasks directly on a user's computer, highlights a broader dilemma: as AI becomes more powerful and is diffused more widely and quickly, managing the trade-off between innovation and control will be critical as China pushes forward with its vision of a smart economy.
The social cost of widespread AI adoption must also be considered and addressed, particularly its impact on employment. "We will take more effective measures to facilitate employment and entrepreneurship through better adoption to the development of AI technologies," the report reads. But the lack of details suggests the government is far from articulating a clear roadmap for managing potential labor displacement.
More importantly, relying too much on AI empowered tools may undermine human communication, empathy and critical thinking. People-to-people exchanges do not make any sense if they are mostly based on exchanges between their AI agents.
In advancing AI ambitions, the government needs to ensure that artificial intelligence serves as a sustained means of building a better life for all.
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